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Coyotes Take a Turn in the N.H.L.’s Safety Net

Despite bankruptcy and temporary supervision by the N.H.L., the Phoenix Coyotes have 81 points and seem headed for the playoffs.Credit
Christian Petersen/Getty Images

In 2003, Jeff Holbrook, the chief spokesman for the Buffalo Sabres, received a call from the team’s finance department. Could he ask the coach to extend practice by half an hour?

Money was slow reaching the team’s bank account, and it would be best if the players did not receive rubber checks in their lockers, Holbrook was told. The players skated some more, the money cleared before they got their checks and no harm was done.

“The last thing you want is for a player to not be able to cash a check, because it would be a free fall,” said Holbrook, who is now the chief spokesman for the Phoenix Coyotes. “You’re trying to keep it together.”

The episode was one of the financial tightropes that Sabres executives walked at the time. The team’s owner, Adelphia Communications, was in financial straits and gave the Sabres to the N.H.L., which supervised the team for about a year until a new owner, Tom Golisano, took over.

For Holbrook, this year seems like déjà vu. Last May, the owner of the Phoenix Coyotes declared bankruptcy and sold the team to the N.H.L., which is managing the franchise until new buyers are approved, perhaps by this spring.

The league has also played a role in supervising the Pittsburgh Penguins, the Ottawa Senators and the Islanders, among others, in recent years.

Each case was unique, but they provide a window into how the Coyotes are coping this year as they await a decision on whether Ice Edge Holdings is approved to buy the team.

This year, as in the past, the league is trying to guide franchises that are under its wing rather than actively steering them. The N.H.L. rarely meddles in the teams’ day-to-day operations. Instead, a SWAT team of league executives uses the opportunity to help improve the franchise’s marketing, ticketing and accounting. As the owner, the league also receives weekly budget updates, approves major purchases and fills budgetary gaps.

Commissioner Gary Bettman and other league officials also hold town hall-style meetings to try to assure the local community that its team is not moving despite its financial uncertainty. League executives use their weight to help negotiate new arena deals and, critically, to find new owners.

“The common thread in the league’s role is to stabilize the franchise and find new ownership and transition to new owners,” said Bill Daly, deputy commissioner of the N.H.L. “More broadly, it is to make a commitment to the city that we’re in.”

In principle, the N.H.L.’s approach appears to be working. Despite their front-office troubles, the Coyotes have the fourth-highest point total in the league. The Penguins are the defending Stanley Cup champions, the Sabres and the Senators have made it to the Stanley Cup finals in recent years, and all three appear headed to the playoffs again this year.

Photo

The league has recently played a role in supervising the Pittsburgh Penguins, who are now a talent-rich team and the defending Stanley Cup champions.Credit
Don Heupel/Associated Press

In practice, though, teams have faced hiccups before the N.H.L. handed them off to new owners, just as the Coyotes are now. Bankruptcy filings are a matter of public record, and when a major league sports franchise files for court protection, people notice.

As a result, many of the companies that do business with the financially hobbled teams want to be paid up front for everything from charter buses to hotel rooms, rather than having to wait for a check in the mail 30 or 60 days after sending an invoice.

“There were a number of situations where we printed programs and we had to pay in advance,” said Cyril Leeder, the president of the Senators, who were under bankruptcy protection and league stewardship in 2003. “It was mostly C.O.D. for food and beverages when they were delivered, too.”

The N.H.L., he said, asked to see the team’s budget every two weeks instead of once a year but was rarely specific about how the team should spend money. Still, it was understood that the focus should be on essentials, not long-term projects.

“We were operating the team, but it was spend what you need, not what you want,” Leeder said.

While austerity budgets create problems, the bigger challenge is making sure there is enough money coming in, particularly from ticket sales and sponsorships. Many salespeople work on commission, and selling season tickets and advertising when a team is in limbo can be difficult at best. So many quit.

“If you’re working on commission, that’s part of the heartbreak,” Holbrook said of the Coyotes, who have reduced their staff by about 12 percent in the last year or so.

The club started the season with 3,500 season-ticket holders, so it has had to focus on boosting group sales and individual ticket sales. The team has played well, which helps. Still, attendance through the first 28 home games was down 27.2 percent, compared with the same period last year, according to Sports Business Journal.

Jeff Morander, the league’s vice president for ticketing strategy and a member of the group working with the Coyotes, visits Arizona every few weeks. (The clock on his BlackBerry is on New York time, and his watch is on Phoenix time.)

He knew that the Coyotes were one of two N.H.L. teams that sold individual game tickets directly to consumers instead of through a ticket provider like Ticketmaster. So he encouraged the team to use the extra contact with fans to sell other services, like advance parking tickets, and to visit more fans in their seats during the game.

He encouraged the team to create a database of fans so it could improve its marketing of ticket plans and other products. Morander is also helping the Coyotes develop a business plan for next season that can be passed on to the new owners.

Ticket pricing is another issue. Larry Quinn, managing partner for the Sabres, said that when Adelphia owned the team, prices were raised frequently. So he slashed season-ticket-plan prices by 25 percent the year after Adelphia exited and promised that no season-ticket holder would pay more than anyone who bought a single-game ticket. The team also did not raise prices in the first round of the playoffs for two years.

“Even though we have leverage over you, we aren’t going to grind you,” said Quinn, who added that there were now 16,000 season-ticket holders, up from 5,800 in 2003.

Jeff Z. Klein contributed reporting.

A version of this article appears in print on March 6, 2010, on page D6 of the New York edition with the headline: Coyotes Take a Turn in the N.H.L.’s Safety Net. Order Reprints|Today's Paper|Subscribe